The new Orban Government has announced in a Facebook post that the minimum wage in Romania might increase by 7.2% in 2020. The increase might be RON 149.7 in gross and the net rise – RON 83 from RON 1,346, RON 17 less compared to the pledge of the former Social Democrat Cabinet.
At the same time, the Liberal Government said the minimum wage will be calculated according to the index of the consumption prices and of productivity and the calculation will be made public this week.
PSD Gov’t used to promise a RON 100 net increase of the minimum wage, meaning to RON 1,363.
“the minimum wage will be calculated according to the index of the consumption prices” – raising the minimum wage increases prices and causes an inflation spiral that simply leads to more demands for a further increase in the minimum wage and therefore higher prices.
Households on fixed incomes – pensioners, the incapacitated, those caring for children or the elderly – become worse off and lower-paid workers may well have their paid hours reduced to compensate for the additional costs to employers.